Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
7359385 | Journal of Economic Theory | 2016 | 10 Pages |
Abstract
I study the problem of social learning in a model where agents move sequentially. Each agent receives a private signal about the underlying state of the world, observes the past actions in a neighborhood of individuals, and chooses her action attempting to match the true state. In contrast to the most existing literature that assumes an exogenous observation structure, observation in this paper is endogenous. More specifically, each agent must pay a cost to make any observation and can strategically choose the set of actions to observe. I show that when private beliefs are strong relative to cost, observation becomes fully informative if and only if the size of the observed actions extends to infinity. In addition, costly observation may lead to better learning than free observation, and the order of acquiring signal and observation significantly affects the learning pattern.
Keywords
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Yangbo Song,